Robert Sinclair said that the 0 per cent stamp duty rate on the first £125,000 of a property’s value would help benefit many buyers beyond the southeast, make it easier to save for a deposit and make the development of a “mansion tax” less likely.
But he added: “It will be broadly positive but should be fairly market neutral in terms of its effect on prices.”
His comments came as Jamie Morrison, a partner at accountancy firm HW Fisher and Company, warned that the changes could help buy-to-let investors as much as first-time buyers.
Mr Morrison said: “The abolition of the stamp duty slab system is a long overdue and very welcome reform to an unfair and archaic tax.
“However it is potentially a double-edged sword, as it will benefit buy-to-let investors as much as the first-time buyers it is trying to help.”
He added: “It is difficult at first glance to see how this measure will achieve the chancellor’s stated aim of helping people get onto the property ladder.”
As part of the changes, in force from 4 December 2014, homebuyers will no longer have to pay tax at a single rate on the entire property price.
Instead, they will pay the rate of tax on the part of the property price falling within each tax band, similarly to how income tax works.
In his Autumn Statement chancellor George Osborne said: “I am announcing a complete reform of a tax that has been described as one of our worst-designed and most damaging of all taxes.
“Stamp duty is charged at a single slab rate on the whole purchase price of a home. It means big jumps in tax when house values tip into a new band.”
He claimed the measures would lead to stamp duty being cut for 98 per cent of homebuyers who pay it.
The Autumn Statement package also includes measures to “take forward existing commitments for up to 42,000 homes, release land with capacity for up to 150,000 homes and commit to new measures to support up to 133,000 homes”.
| Property purchase price | New rates paid on the part of the property price within each tax band |
| £0 - £125,000 | 0% |
| £125,001 - £250,000 | 2% |
| £250,001 - £925,000 | 5% |
| £925,001 - £1.5m | 10% |
| £1,500,001 + | 12% |
Source: HM Treasury
Council of Mortgage Lenders director general Paul Smee said: “Although there are losers as well as winners, the vast majority of mortgaged transactions will benefit from lower tax as a result of this move.”
According to CML data, among mortgaged transactions over the past year, 21.6 per cent were for less than £125,000, 47.9 per cent for £125,000 to £250,000, 29 per cent were for £250,001 to £925,000, 1.1 per cent were for £925,001 to £1.5m and 0.4 per cent were for more than £1,500,001.
But Christopher Mahon, investment manager and director of asset allocation research for Baring Asset Management, warned: “These properties are overwhelmingly concentrated in London so there is a risk that the London property market reacts badly to these reforms, with a cascading effect around the country.”
Karen Barrett, chief executive of unbiased.co.uk, said: “The changes to Stamp Duty will have huge implications for anyone buying a property, and particularly first-time buyers who will be more likely to be impacted on the changes at the lower end of the scale.”
